In the second annual Chief Executive/Applied Finance Group Wealth Creation Rankings, we access the best and worst performers among the S&P 500 over the last three years.
It’s been a brutal period for wealth creation. Yet some CEOs have managed to improve their performance. In its second year, the wealth creation index developed by Chief Executive, Applied Finance Group, and Drew Morris, CEO of Great Numbers!, seeks to identify those business leaders who have done the best job of creating true economic value...
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Companies get hitched for smart reasons—except when they don’t.
Remember when companies walked the matrimonial aisle without Uncle Sam tying the knot? Lately, corporate mergers and acquisitions seem to be arranged and sealed by the federal government. Private equity deals have fallen by the wayside, and strategic unions are few and far between. With little to do, the firms that make a
living off M&A deals—like law firms, consultancies, venture capitalists and investment bankers—are readying clients for the next matrimonial season. [Our cautionary tale: the Six Deadly Sins of M&A. It’s a story of companies getting hitched for what seem like smart reasons, except for the fact that they’re not...]
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Long-Term Sustainability of Performance Is the Key to Success in Postcrisis Capital Markets, Says Report by The Boston Consulting Group.
Companies suffering a massive decline in stock market valuation in the wake of the global economic crisis should learn the lessons of an elite group of so-called sustainable value creators that have generated sizable and sustainable shareholder
returns over a decade, according to a new report by The Boston Consulting Group (BCG). In Searching for Sustainability: Value Creation in an Era of Diminished Expectations, the eleventh annual report in its Value Creators series, BCG identifies 25 companies with a market capitalization of at least $30 billion that have consistently outperformed their local stock-market average during the 10 years from 1999 through 2008. These include...
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If executives and their teams would examine some common misconceptions, an often flawed decision-making process could be improved, writes Bob Frisch.
When executive teams find themselves unhappy with the dynamics of decision-making, they often seek psychological solutions, going through exercises in teamwork, trust, communications, and the like. But through the course of a career spent facilitating these teams, I've found that most of the problems aren't in their psyches, but in
the widespread myths about the teams themselves. CEOs and their teams need to take a hard look at these myths, recognize reality, and fix the way they make decisions...
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"Crises offer rare opportunities to make major changes in an organization because they lessen the resistance that exists in good times."
It is tough to think positively in a crisis.
Yet one overarching lesson in a new book by HBS professor Bill George, 7 Lessons for Leading in Crisis (Jossey-Bass), is exactly that: See crisis as a chance to develop and enhance your leadership skills. "Optimistic, forward-thinking leaders are sitting on a rare opportunity, and they must be systematic in how they take
advantage of it if they want to make positive changes," says George, a Professor of Management Practice at HBS and the former chairman and CEO of Medtronic, which develops medical technologies to treat chronic diseases. "Leaders must be willing to ask for help," he continues. "They should rely on a mentor, an internal management
team, and an external support group. No one can be an effective leader in a crisis by attempting to go it alone. Leaders must be the first to recognize this reality and plan accordingly." The seven leadership lessons include:...
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You've held your own while negotiating dozens of successful deals. Even so, you want to take your game to the next level. What's the next step?
There are plenty of guides that offer tips on negotiation strategies. As useful as these are for a grounding in the fundamentals, they don't always fit the complex, ever-changing deal situations that occur in today's business environment. Harvard Business School professor Guhan Subramanian fills that gap by examining complex
deals where negotiators are fighting on multiple fronts—across the table for sure, but also on the same side of the table with known, unknown, and potential competitors. In February 2010, Subramanian will publish Negotiauctions: New Dealmaking Strategies for a Competitive Marketplace, a book that draws on his
experience studying and advising on complex corporate transactions and high-stakes personal transactions such as buying a home or car. The first Harvard faculty member to hold tenured appointments at both Harvard Business School and Harvard Law School, Subramanian is the faculty chair for the new HBS Executive Education course
Managing Negotiators and the Deal Process (November 8-13, 2009). Subramanian recently discussed his thoughts on the current business environment and how deals get done with HBS Working Knowledge...
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A software firm's finance and operations chief puts himself on the front lines of customer interaction.
Amid the constant switching of hats that is a big part of life for most small-company executives, formal titles mean little next to doing whatever has to be done. At TeamQuest Corp., a $25 million vendor of information-technology-optimization software, Terry Wisner is not only CFO but chief
operating officer as well. But his biggest priority isn't the books, the capital markets, or operations. It's maximizing the revenue stream. At a time when many customers are short on cash, there is an especially keen need to keep them happy by
negotiating flexible contract terms, and Wisner helps with that. [An edited version of CFO.com's interview with Wisner follows...]
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Last week, Equinix announced it was acquiring Switch & Data in a cash and stock deal. But the deal timing, and its prospects for tax-free treatment, will be constrained by IRS rules.
Equinix Inc. and Switch & Data Facilities Company entered into a definitive agreement last week, in which Equinix aims to buy its rival in a cash and stock deal worth $689 million. The transaction is intended to qualify as a tax-free exchange and, presumably, is conditioned on securing an opinion of counsel regarding such
qualification. The press release strongly suggests that the business combination will be structured as a reverse triangular merger. Thus, Equinix will be creating...
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The U.S. and international accounting standards boards mull the divide between them on how banks should recognize changes in a loan's fair value.
Accounting for financial instruments - including everything from traditional bank loans to exotic hybrid securities and derivatives - was in the spotlight this week as both U.S. and international standard setters announced changes in how companies would have to account for them. Each group is nearing completion of the first of the
three phases of a project that comprises recognition and measurement, loan-loss provisioning, and hedge accounting. But differences still exist between the two sets of proposed rules. Some of those will be ironed out next week when the International Accounting Standards Board travels to Norwalk, Connecticut, for a three-day joint
meeting with the Financial Accounting Standards Board. The meeting is one of many the two boards have had since 2002, when they agreed to work together to issue a single set of global accounting standards. The decisions made this week will frame
some of next week's agenda. On Wednesday, FASB members reached consensus on how companies should account for...
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Early results indicate that filing financial statements in XBRL is far from simple.
Tim Kingston, manager of corporate reporting at Zimmer Holdings, thought he was as prepared as he could possibly be to meet the Securities and Exchange Commission's new XBRL requirements. Soon after the SEC mandated that large companies begin filing financial statements that include so-called interactive data tags this past summer,
Kingston researched his options and decided to buy software that could address the task, rather than outsource the process to a financial printer. ["Everything was running smoothly," recalls Kingston. Until, that is, the day before the filing.
That's when an independent check of the company's XBRL tags by its financial printer turned up a bevy of technical errors — errors that would, in theory, lead the SEC to reject the document... The process, meanwhile, will only get more complex next year, as the time-consuming task of putting detailed tags on prose such as footnotes
becomes part of the requirement. In short, the first round has proven to be "a wake-up call that just because we're doing XBRL doesn't mean we're doing it right,"...
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More companies are looking to make deals with tax authorities on transfer-pricing terms to avoid unexpected penalties, tax advisers report.
Charlie Brown's sister should have been a tax authority. When badgering her brother into writing her Christmas list, Sally made a memorable declaration that would resonate with any taxman: "All I want is what I have coming to me. All I want is my fair share." Indeed, tax authorities are increasingly insisting that they get their
piece of the pie as they step up enforcement efforts over transfer pricing, or the pricing of sales and services between a company's subsidiaries. These transactions in particular have caught the eye of international tax authorities whose coffers have dwindled as the global economic crisis shrunk the revenue of multinationals
and, subsequently, their taxable income. The authorities "want to make sure they definitely get their fair share as their tax revenue is going down," David Canale, director of Ernst & Young's transfer-pricing controversy services, tells CFO.com. Moreover, as one jurisdiction gets more aggressive, others seem to jump on the
bandwagon as well, to fight for any taxable dollars that could get lost in the push-pull involved in transfer-pricing disputes. To mitigate their risk of unexpected penalties for transfer pricing that an overseas or domestic tax agency
may deem unfair, inaccurate, or even fraudulent, companies are increasingly pursuing...
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Nearly half of U.S. companies are automatically enrolling workers into 401(k) plans, according to a new Watson Wyatt survey.
The poll also uncovered that the number of employers that use target-date or lifecycle funds as their default option has increased dramatically in the last few years. Forty-seven percent of 149 large employers now auto-enroll their employees into their defined contribution plan, while one-third of those that do not currently
auto-enroll are pondering the idea, found Watson Wyatt during the March and April 2009 survey. “While plan sponsors have made progress towards encouraging greater participation, saving and educated decision making, there is still room for improvement,”...
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Benefits budgets have become casualties of the recession.
This year 46% of employers report that their benefits budgets increased from 2008, a sharp drop from 63% in 2008, reports Prudential Financial, Inc., the financial services firm. The study, A New Day in Employee Benefits, found that about one-third of employers are maintaining their 2008 budget levels, while 15% say their budgets
have decreased by an average of 16%. [Other key findings from the report included:...]
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Profits aren't as low as you might think. Here's how companies in 12 industries are faring, plus tips for defending your own bottom line.
Given the barrage of bad economic news over the past 18 months, you would think that the profit margins of U.S. companies would have withered away to nearly nothing. But though it's true that bottom lines have been hammered over the course of the
recession, something promising has begun to happen: Profit margins are ticking back up. The net margins of privately held U.S. companies grew more than...
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Overwork benefits nobody.
Judging from all the responses I received to my recent column "Get Rid of Jackass Clients," far too many executives have customers who exhaust them and sap their productivity. Stress and inefficiency are everywhere. That's why you should implement the No BlackBerry Rule. How often do you hear colleagues and friends say
they're working like crazy? I hear it constantly, especially now, in the current difficult economy. So many executives are clawing to keep their jobs or fighting for their share of dwindling bonus pools. They complain to the world about their sleepless nights, burning the midnight oil. They wear their haggard eyes and lonely
spouses as badges of honor. [They even sleep with their BlackBerrys, so they can respond to e-mails from 12 time zones away. Do they really need to be so busy?...]
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The customer is not always right--so fire your wrong ones.
Jackasses have been in the news lately, with President Obama caught on an open mike observing that Kanye West was one after the rapper made a fool of himself at the recent MTV Video Music Awards. Jackasses are always with us in business too. Robert Sutton in his book (using a cruder term for the same sort of person) The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't, argues that talented yet disruptive employees always cause more harm than good. He says you need to either reform them or push them out. But what about when it's not employees but clients who are difficult, who berate your team and make you waste time running around in circles? Should you just suck it up and make sure you hit the quarterly numbers? Or should you fire those customers? [How do you know if you should fire a client? Look for these three signals:...]
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the key to success in postcrisis capital markets
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Guidelines for Ethical Business Practice. We are committed to the proper use of
email and to protecting consumers from fraudulent or inappropriate
offers.